2010 Year in Review of Biofuels

Biofuels took a step away from the limelight in 2010, replaced by the buzz surrounding electric vehicles. But there were still a variety of policy decisions, and economic milestones that made the sector interesting in 2010.

It’s no secret that the corn ethanol industry is an unsustainable business — economically and environmentally — but yet the industry’s tax credits and import tariffs were once again extended. At the same time cellulosic ethanol, yet again, didn’t meet the EPA’s projections for the biofuel mandate. At the same time, next-gen biofuel firm Amyris (s AMRS) debuted on the public markets, and didn’t fare too shabbily. Here’s 2010 in biofuels:

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1. Cellulosic ethanol, stalled, again. The Environmental Protection Agency had to once again scale back its biofuel mandates, partly because the EPA found in its final rulemaking that cellulosic ethanol companies in the U.S. would not be able to produce the projected amount. Originally the mandate called for 100 million gallons of cellulosic ethanol to be produced in 2010, but companies have produced basically none. For 2011 the EPA projects that five companies — Range Fuels, DuPont Danisco, Fiberight, KL Energy, and KiOR — will only be able to produce 6 million cellulosic ethanol-equivalent gallons.

2. Will cellulosic ethanol grow in 2012? At the same time that the EPA scaled back the 2011 cellulosic ethanol projects, the fed group said that in 2012 it thought many more companies, including 20 plants, could produce potentially 300 million gallons of cellulosic ethanol in 2012. Is the EPA being misled, yet again, by too-eager, too-ambitious companies? I guess we’ll see in another two years. Remember the EPA did keep beleaguered, infamous Cello Energy in its 2010 cellulosic projections up until quite recently … after it went bankrupt.

5. Crunch time for capital-intensive, next-gen biofuel. Next-gen biofuel companies that aren’t financially solid enough to IPO, but need financing to build plants and commercialize, struggled to raise funding from private investors in 2010, and in 2011, will continue to do so. Synthetic biology biofuel startup LS9 just raised $30 million from BlackRock, and KiOR upped its funding to a whopping $110 million this summer from backers including Khosla Ventures. These types of companies will need a lot of money to commercialize their tech, and if they don’t get it, expect some to go bust in 2011.

Whereâ€™s the coverage on Poetâ€™s Jeff Broin, the leading producer of ethanol in the world? Broin is commercializing cellulosic ethanol in 2012, from corn cobs, leaves and husks â€“ 20 million gallons a year from the first operation. This is referred to as light stover, about 25% of what is typically left in the field, a huge resource â€“ 87 million acres worth. Broinâ€™s technology will be replicated across the industry. The important thing to come away with, is that cellulosic ethanol based on light stover, will be integrated with existing corn ethanol plants. This will improve the sustainability of corn ethanol. In this decade, all corn ethanol refineries will have cellulosic bolted onto them, converting agricultural waste and local biomass into additional fuel.

Where is the coverage of Algae based biofuel? Solarzyme is BIG NEWS. They are delivering 22,000 gallons of algae based biofuel to the US military, and diversifying into numerous value added byproducts.

Solarzymeâ€™s biggest impact will be an integrated project with a Corn Ethanol Refinery in France â€“ the first of its kind. Thatâ€™s right â€“ I said corn ethanol. Solarzymeâ€™s method of growing heterotrophic algae on biomass sugars, exploits corn ethanol refinery waste water â€œcentrateâ€, which contains 6% unprocessed sugars and a multitude of nutrient minerals, used to grow algae. Since algae can double on a 1-2% sugar solution overnight, this is a match made in heaven. The refinery waste heat and CO2 will also be exploited to grow algae.

Gasoline consumption in the US has dropped over 8% over the past few years, while corn ethanol displaced imported oil from which gasoline is made. In addition to producing a huge amount of byproduct livestock feed, the corn ethanol industry produced over 13 billion gallons of domestic fuel in 2010, wholesaling in the range of $1.50 to $2.25 a gallon, depending on market conditions. Capacity is roughly 15 billion gallons for 2011. Compare this with synthetic fuel companies that produced test tubes and beakers of fuel costing $6 to $20 a gallon, while they hype their tech and ride the gravy train of R & D funds.

Corn ethanol is the best thing we have NOW – to displace foreign oil and neutralize unburned carcinogenic residues in gasoline, such as the killer benzene, toxins that you would otherwise be breathing. Corn ethanol is the backbone of our biofuels industry, and it will be for years to come. Itâ€™s not unsustainable. It can survive, even without subsidies, in the current market. The $44 billion a year we pay out in subsidies to the petroleum industry is 10-12 times higher than what goes to ethanol blenders. And that doesnâ€™t include the cost to protect foreign oil installations and shipping lanes, which is estimated to cost taxpayers another $100 billion a year. The cost to protect corn ethanol â€“ Zero.

Corn ethanol is a work in progress thatâ€™s still evolving, just like anything else. Instead of making ethanol directly from corn sugars, we will be feeding corn sugars to heterotrophic algae, which multiplies the feedstock overnight â€“ onsite. Grown in dark tanks on the sugars, this algae is 1,000 times more concentrated and requires a very small footprint of land. This will transform the corn ethanol industry into a carbon neutral or carbon negative economic engine. This method will also multiply our production of high quality complete protein livestock feed and human supplements. We can integrate advanced ethanol technology and synthetic fuels into this system.

This same technology can be used to exploit MSW, municipal sewage, forestry and crop waste, industrial waste and effluent, manure from dairy, poultry, hog, and cattle feeding operations, and fish and seafood farms, etc.

I must take exception to the statement “Itâ€™s no secret that the corn ethanol industry is an unsustainable business â€” economically and environmentally.”

I am a cellulosic ethanol proponent who is extremely grateful to the rural American enterprises that have spearheaded the only sustainable alternative fuel we have in the U.S. At worst, it is the “methadone” that is helping us wean off of our oil addiction at the pump while insuring that gasoline burns cleaner and with higher octane. At best, it is the existing industry that is enabling the U.S. to develop the new jobs, infrastructure, pipelines, installed blender pumps, and ag research on sustainable farming practices that will enable cellulosic ethanol to have a market and be more environmentally sustainable when it becomes commercially scalable.

People underestimate the difficulty of market entry for new technologies against an entrenched, monopolistic paradigm like the oil industry. While we suffer watching the country’s wealth siphoned off to pay oil barons and fund oil wars, one of the few bright lights is the revitalization and developing energy self-reliance of rural America. This has been made possible by the emergence of the corn ethanol industry.

I hope to see energy self-reliance spread to the Wood Basket of America as well as the environmentally challenged areas plagued by beetle-kill forests, hurricane knock-down, and landfills. That won’t happen unless the biofuels industry has the public and policy support necessary to enable research, development, and deployment – starting with corn ethanol.